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Daniel Gros is Director of the Brussels-based Center for European Policy Studies. He has worked for the International Monetary Fund, and served as an economic adviser to the European Commission, the European Parliament, and the French prime minister and finance minister. He is the editor of Economie Internationale and International Finance.

The writer simplefying trade to commodity prices.
But trading is nothing else just exchanging labor cost (wages)taxes and profits.
Of course outsourcing in the beginning helped the trade numbers to grow.
"Let nations to do where they are the most productive" yes printing money is the specialty of the usa.
To simplify it when you have trade deficit you have job deficit and tax deficit and than you need to borrow money to cover the trillion government deficit.

Trade has substantial benefits; however, a major causes of collateral damage and restraints on realizing maximum benefits result from current rules and practices that allow large trade imbalances to persist. If countries were required to commit to reasonably balanced trade to gain favorable treatment/acceptance of their exports, and they knew that successful exporting means they are expected to spend their export earnings (or face trade sanctions), their incentives and related trade practices would change. For example, the incentives for beggar thy neighbor policies like currency manipulation, subsidies on exports, tariff and non tariff barrios to imports, etc. would substantially diminish under a balanced trade paradigm. Similarly, countries would be more accepting of low cost imports that put some of their manufacturing out of business if they knew that the money paid for those exports would flow back into their economy somewhere else creating new jobs that help offset those lost to the imports.
Developing countries need to export in order to build their economies; however, they do not need to run large persistent trade surpluses. Rather, if they spent the surpluses internally it would increase their economy.

I'm really agreeing with you.
Only
The problem that trade balance is calculated in curencies.
But when you convert it to employment( jobs) in import lost and jobs in export gained it has a picture that even if the usa had a currency trade balance with China because of the deference of wages would have 10 of millions of job deficit.
So it seems like a reasonable idia to equalize by payments the trade in balances it wouldn't help completely erase the job deficit.
Trading between two countries with huge wage deference will always decreate many more jobs than recreates.
Of course the easiest way to balance it(jobs deficit ) would need to have tax components on the import equal if it would be made in the higher waged country and than the government cloud create jobs from the tax revenues.

The arithmetic is simple. The debts must be paid. We must abolish social spending in order to pay the banks. We must abolish government and turn its role over to the banks so that they can extract income from the economy to pay the bondholders. What is the best gamble in the world right now?

Econ 101 and history show demand increases when 1) people have sufficient levels of income to spend beyond just the basics, 2) personal savings rates are higher than at present levels, and 3) investment is made in real, productive assets. Incomes and personal savings have been flat to declining in the US for the past 2 decades - people cant spend or save what they don't have. Nor has there been any significant investment by government or business in real, productive assets (infrastructure, factories, equipment or people).

Your article doesn't discuss the impacts of automation on jobs and wages nor the impact of zero- or negative interest rate policies of central banks on savings and investment leading to misallocation of financial resources into non-growth areas of the economy.

In the recent few decades, demands were also generated from the wealth creation from higher asset & stock prices. As shown in fin mkt crisis 2008, there is a mismatch. Yet the central banks pump more money to re-inflate bubble.

It is true that mainstream economists and policymakers overhyped globalization. Their error is one of omission, for they are blind to by far the largest negative effect of globalization.

This effect is not automatic Pareto-compensation, as many economists would have it, nor is it falling commodity prices. It is instead the inevitable conflict among sovereign states is a global conflict. Specifically, to avoid or reduce a current account deficit, most states most of the time choose thrift policies. "Austerity" is a special case of thrift; another is a VAT; still another is a visible or hidden subsidy for the tradeable sector.

The result is deficient world aggregate demand. The solution is a coordinated fiscal stimulus by the large-economy national states. Last time around, this was achieved by means of "war Keynesianism" and if economists and policymakers do not get over their blindness to the accelerating international thrift race, it will be the solution again.

I think that's wrong Matthew. Comparative advantage may derive from physical location, for example, which is a factor independent of the availability of capital or labor in its effects. Commercial fishing will not find much of a home in Nebraska ☺

"Dismantling trade barriers enables countries to start specializing in sectors in which they are more productive, which leads to higher growth and living standards for everyone"

"Specialization" aka "comparative/absolute advantage" are fantastic concepts on paper....the religious devotion to which, on the part of the global polieconomic leaders, is severely undermined by the facts.

The main problem is that the argument is predicated on scarce inputs - either capital or labor - which must be applied for maximum efficiency. Yet here we are, with tens of millions in the developed world out of work and trillions in cash sloshing around in bank vaults or otherwise chasing CB-inflated returns. The specialization has not happened...unless you count the Chinese "specialization" in making stuff and the resulting American specialization in collecting an unemployment check and using ilicit narcotics.

The integration of the economic space of transnational companies and banking had an impact on tax basis to be raised by tax departments. On taxation level, the motto is ..do not export taxes in exports. As the internationalization of production proceed, and most important the increasing exports and imports inside a conglomerate grew, governments as a whole lost tax basis, what may created tax imbalances. That impacts on fiscal health, trust and necessary state action to correct social and economic imbalances.

National, regional and local governments are heavily indebted, as a rule. Welfare state is not to come back to lessens social degradation. Income distribution worsened. Higher incomes tend sometimes to shift profits, use and abuse loopholes and have higher saving rates, and lower consumption expenses as an income percentage (if there is a lack of aggregate demand, it can be part of a problem). It is not needed a quantum physics intelligence to predict were these global institutions, political, economic and academic linked,(maybe it is needed some grade of mendacium spurcus. ) will lead us if they go beyond reason, or better, without reform? Next crisis.?

Dear Daniel, very good points in your note. What strikes me is that politicians the world over and economists in international organizations love to think they are in charge of statistical aggregates (trade, growth) w/o delving on the underlying factors (e.g. protection, aggregate demand). The fact is, you don't have levers and buttons with "trade" or "growth" written on them. What you do have is complex health and safety procedures, or complex bureaucracy for starting a business; inefficient customs procedures, or off-putting taxation on real estate transactions; and so on. These are the kinds of things to look into and do something about - and leave trade and growth go where they may.

"But no significant new barriers to trade have been identified. Instead, the IMF declares, some three-quarters of the slowdown in trade growth is a result of “overall weakness in economic activity,” especially investment." -- Daniel Gros

Of course, barriers to trade almost don't exist these days. There is no more room to add capacity there, all the nations that engage in free trade are already engaged in free trade. There are few other nations that haven't opened their doors to globalization.

What is down, is aggregate demand.

-- The Elephant in the Room --

Why, because over 50% of the world's wealth is owned by the 1 percenters -- and by 2030 over 75% of the world's wealth will be owned by the 1 percenters.

And what is all that money doing? Nothing.

Most of it is simply being recycled in the derivatives market or sitting in banks, doing nothing productive.

People who subsist on ridiculously low wages, don't go out buying homes and cars and trucks -- and these days, that's more than the bottom quintile in every Western nation, it's more like the bottom 3 quintiles! (And getting worse, each decade)

When bottom quintile consumers can't afford to buy, due to low wages or unemployment, that's a problem -- but when it's the bottom 3 quintiles, that is a catastrophe!

But nobody is doing anything about it. All the talk revolves around everything but that.

Apparently, "the problem" is *Too Big to Solve* so it will simply be ignored.